Product design in UK Plastic Cards - What can be learnt from Abroad?

This publication has been discontinued on July 19, 2011.

Introduction

Abstract

Overview

Introduction

Part of the UK Plastic Cards 2007 series, this brief provides insight into some of the most innovative value propositions from card issuers around the world and examines how such products could be adapted by issuers in the UK. The brief examines loyalty programs as well as other new developments in areas such as card functionality and appearance.

Scope

• The brief looks at products in the US, Europe and the Middle East.
• Includes a detailed discussion on payment card loyalty, including chip-based systems.
• Contains several examples of how issuers have used their cards to cross sell other financial products.
• Includes a discussion on variable pricing strategies.

Report Highlights

Issuers in the Middle East and Turkey have some of the most advanced reward programs in the world, often making use of the electronic chip on the card to allow for instant redemption. Whilst this type of reward program has some potential in the UK market, it has yet to be introduced.

In the US, several issuers have developed expertise in cross-selling other financial products to their cardholders. Examples of this are an American Express product that automatically opens a savings account for each cardholder, and a Citibank product where cardholders receive rebates off their mortgage payments.

UK issuers can also learn from their European counterparts. One of the most interesting developments comes from a bank in Hungary which has issued a payment card that acts as a credit card at POS terminals but a debit card at the ATM.

Reasons to Purchase

• Find out what issuers are doing in other markets to attract and retain cardholders.
• Understand innovative product designs across the areas of loyalty, pricing, and product bundling.
• Discover how innovations in other markets could be applied in the UK.

Table of Contents

• Overview
  • Catalyst
  • Summary
• Table of Contents
• Table of figures
• Table of tables
• Product design in the UK - What can be learnt from abroad?
  • Introduction
  • Markets in the Middle East lead the way in chip-based loyalty programs
    • Chip-based loyalty schemes offer several advantages over traditional schemes
    • Garanti Bank offers cardholders a range of options on its chip-based bonus program
      • The chip allows for instant redemption
      • Garanti also has several non chip-based innovations
      • Moreover, since the success of Bonus Card, Garanti Bank has since launched a new and more innovative scheme
    • Mashreqbank' s WOW! Card rewards repeat purchases rather than transactional loyalty
      • The chip allows Mashreqbank and its partners to reward transaction frequency as well as value.
      • Other data stored on the chip can help further the relationship between the program and the partner
      • The value offered to the retailer is considerable
      • Cards & Payments Team view
  • There have been a range of innovations in the US
    • Citibank has extended its loyalty scheme to its other banking products and has a loyalty program that helps to pay off cardholders' mortgages
      • Citibank' s Home Rebate Card can help cardholders pay off their mortgage early
      • Cards & Payments Team view
    • American Express has a range of interesting loyalty propositions in the US
      • The One Card encourages cardholders to save money and results in more bank accounts at American Express Bank
      • Cards & Payments Team view
      • American Express also issues a series of cards tailored to particular cities
      • Cards and Payments Team view
    • Bank of America launches affinity banking
      • Cards & Payments Team view
  • Issuers in the UK can also learn from their European counterparts
    • In the Netherlands, Greencard offsets the cardholder' s carbon emissions
      • Cards & Payments Team view
    • Allied Irish Bank' s (AIB) ' be' credit card varies the APR according to how much consumers spend
      • AIB uses one pricing strategy to acquire and then two different pricing strategies to retain customers
      • Cards & Payments Team view
    • Raiffeisen Bank in Hungary has introduced a new card that functions both as a debit and credit card
      • Such a functionality brings huge innovation on the part of Raiffeisen Bank to the market
      • Cards & Payments Team view
    • In Spain, issuers have tried to make the most of colors and shapes
      • Card appearance has been a focus for innovation
      • Cards & Payments Team view
    • Summary
• APPENDIX
  • Definitions
    • APACS
    • Average transaction value
    • Balances outstanding
    • Charge card
    • Credit card
    • Debit card
    • EMV
    • Interchange
    • OFT
  • Methodology
    • Primary research
    • Secondary research
  • Further reading
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Tables
    • Table 1: Rates of tree replacement per type of expenditure on the Greencard, 2006
    • Table 2: Current relevant Datamonitor publications, 2007
    • Table 3: Future relevant Datamonitor publications, 2007
  • List of Figures
    • Figure 1: The Garanti Bonus Card, 2007
    • Figure 2: Garanti gives its partners access to detailed customer information via a website
    • Figure 3: Garanti Bank' s Flexi card allows customers to choose their own interest rate and bonus scheme, December 2006
    • Figure 4: Chips allow merchants to encourage repeat business
    • Figure 5: Chips can bring together a range of offers to make a compelling customer loyalty offering
    • Figure 6: The Citibank Home Rebate Credit Card offers considerable savings for home owners
    • Figure 7: La Caixa has introduced a range of high profile novelty cards
    • Figure 8: La Caixa has introduced mini visa cards

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